Many Georgia voters who went to the polls last week had the economy on their minds.
Even if they preferred to follow hard economic data rather than harsh political rhetoric, the economic picture defies simple narratives. Inflation year-over-year has been running above 8%, though it slowed in October. The increases have put strain on everyday budgets, but high-earning households look like they’re spending.
Consider Kolter Urban, a subsidiary of Palm Beach, Florida-based Kolter Group. In Buckhead, it’s close to selling out luxury condos at its 22-story Graydon tower. A short walk down Peachtree Road is the 18-story The Dillon, where Kolter recently began construction, with units starting in the $800,000s.
More big tech companies are beginning to cut jobs. Last week, Atlanta Business Chronicle reported Twitter Inc. (NSE: TWTR) is laying off 62 workers at its Ponce City Market offices along the BeltLine Eastside Trail. Meanwhile, Meta Platforms Inc. (Nasdaq: META) will take a $2 billion hit as it cuts real estate costs by getting out of office leases.
We continue hearing from sources that employers suggest more layoffs are coming, but as of September, Atlanta’s labor market still looked strong. Unemployment stood at 2.5%, down from 3.3% a year ago. Nationally, job openings have fallen slightly in recent months but remain 50% higher than just before the pandemic.
As we project what direction the Atlanta economy could take in the first quarter and beyond, we are leaning on our reporters to engage with their sources about the challenges and opportunities ahead.
Here are three storylines we are following:
Green revolution
Across the rural South, more automakers are shifting production to electric vehicles. A supply network including battery makers will surround those plants. Nordic clean energy company Freyr will build a $2.6 billion battery manufacturing plant in Coweta County, its first facility in North America. Nashville Business Journal is reporting today South Korea-based LG Chem is behind a potential $3.2 billion project targeting Clarksville, about an hour north of the Music City. Typically, Georgia and Tennessee compete for projects like this. Meanwhile, as more logistics providers electrify their fleets, they will drive additional demand for charging stations. Atlanta’s roughly 800 million square feet of industrial warehouse properties are likely locations. Tenants in the transportation business are already demanding new electric vehicle charging infrastructure. Giants such as Prologis Inc. (NYSE: PLD) are responding, and others will follow their lead.
Construction slows
The problem is debt. With so much uncertainty, lenders aren’t as willing to underwrite new development. With interest rates continuing to rise, developers aren’t as apt to agree to the terms for new, more expensive financing. Instead, they are shelving projects. Industrial and apartment property developers may have an easier path toward new construction. For office properties, work-from-home continues to cloud the demand picture.
Demand for data centers
Companies continue building out their digital infrastructure, a trend that surged during the pandemic. Atlanta is one of about 10 primary markets where demand should remain centered, according to a recent report from the Urban Land Institute. Atlanta contractors are reporting solid activity for so-called mission critical projects, even if development slows for the construction of other property types.
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Nov 15, 2022 by The Beat Maker - 0 Comments